Have you ever wondered why an economist would say that giving tax cuts to the rich makes the economy better? Or why they say that getting rid of unions is good for the economy?
Watch this to learn why some economists say things like this:
Rachel Maddow shares details of a report showing Koch brothers funding behind an economic report flattering to conservative economic policies.
Read this, at The Nation: The Scholars Who Shill for Wall Street,
Zywicki’s withering arguments against financial reform have earned him guest columns in The Wall Street Journal, The Washington Times and on The New York Times’s website. Lobbyists representing the largest consumer finance companies in the country have cited his writings in letters to regulators, and the number of times he has testified before Congress is prominently displayed on his academic website at the George Mason University School of Law.
What isn’t contained in Zywicki’s university profile, CV, byline or congressional testimony is the law professor’s other job: he is a director of the Global Economics Group, a consulting business that boasts in a brochure that its experts have been hired by industry to influence the CFPB and other regulatory agencies. Nor does Zywicki advertise Global’s client list, which includes some of the biggest names in the financial industry, among them Visa, Bank of America and Citigroup.
Last summer, Zywicki’s firm was retained for $500 an hour on behalf of Morgan Drexen, a debt-relief company accused by the CFPB of deceiving consumers and charging illegal upfront fees. None of these potential conflicts of interest, however, have been disclosed during the course of Zywicki’s anti-CFPB advocacy in the media or in government.
Several of the anti–Volcker Rule academics providing comments to regulators, such as Harvard Law School professor Hal Scott, have been paid by investment banks seeking to block the rule. A nonprofit financed by Citigroup, JPMorgan Chase, Wells Fargo and other investment banks has paid Scott nearly $1.3 million in compensation since 2007, as Reuters reported in 2010. Separately, Scott has received more than $1.7 million in cash and stock from Lazard since 2006, when he was elected to the company’s board. Scott’s submissions to regulators neglect to mention these payments and other consulting jobs, including one for State Street Corporation, that may color the professor’s outlook.
The same problem exists with congressional testimony thanks to an ethics procedure change by House Republicans in 2011, which removed a requirement that those giving expert testimony reveal their private sector ties. So-called “Truth in Testimony” forms now ask only if an expert witness has received earmarks or government grants, allowing many Wall Street–sponsored professors to assume the guise of academic neutrality.
Then there is this, at the New York Times, Academics Who Defend Wall St. Reap Reward,
… Craig Pirrong, a professor of finance, … has positioned himself as the hard-nosed defender of financial speculators — the combative, occasionally acerbic academic authority to call upon when difficult questions arise in Congress and elsewhere about the multitrillion-dollar global commodities trade. …
What Mr. Pirrong has routinely left out of most of his public pronouncements in favor of speculation is that he has reaped financial benefits from speculators and some of the largest players in the commodities business, The New York Times has found.
How many others? Here is a clue: Priceless: How The Federal Reserve Bought The Economics Profession,
The Fed keeps many of the influential editors of prominent academic journals on its payroll. It is common for a journal editor to review submissions dealing with Fed policy while also taking the bank’s money. A HuffPost review of seven top journals found that 84 of the 190 editorial board members were affiliated with the Federal Reserve in one way or another.
“Try to publish an article critical of the Fed with an editor who works for the Fed,” says Galbraith. And the journals, in turn, determine which economists get tenure and what ideas are considered respectable.
The pharmaceutical industry has similarly worked to control key medical journals, but that involves several companies. In the field of economics, it’s just the Fed.
What does this mean?
Galbraith, a Fed critic, has seen the Fed’s influence on academia first hand. He and co-authors Olivier Giovannoni and Ann Russo found that in the year before a presidential election, there is a significantly tighter monetary policy coming from the Fed if a Democrat is in office and a significantly looser policy if a Republican is in office. The effects are both statistically significant, allowing for controls, and economically important.
They submitted a paper with their findings to the Review of Economics and Statistics in 2008, but the paper was rejected. “The editor assigned to it turned out to be a fellow at the Fed and that was after I requested that it not be assigned to someone affiliated with the Fed,” Galbraith says.
Publishing in top journals is, like in any discipline, the key to getting tenure. Indeed, pursuing tenure ironically requires a kind of fealty to the dominant economic ideology that is the precise opposite of the purpose of tenure, which is to protect academics who present oppositional perspectives.